The True Money Supply has been updated for the month of September. It shows a slight increase for the month but is essentially unchanged since April.
Source link: http://archive.mises.org/8801/tms-updated/
TMS updated
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Unchanged? How can that be? we know the government put in an 800 billion bailout, that money had to come from somewhere, I doubt it was taxes or bond sales to foreigners. Also, the Fed loaned out several hundred billion in addition to it, we know that money had to come from somewhere too. I can’t imagine those are anything other than inflationary,
Loans against current assets doesn’t increase the money supply. Banks are hoarding cash to protect their “solvency”. Deleveraging (unwinding of credit derivatives),at this stage, will also cancel out any new money created, hence the falling prices in all financial assets and contraction in business models reliant on credit.
In the next 3-6 months, consumer and capital goods prices will also start dropping. We’re already witnessing it in gas prices. Banks are not lending as before, consumers are not spending as before, the investment bank model went up in smoke and the Fed and the Government can not force people to take on debt.
Deflation is good and Cash is King !!! The current economic crisis is like a roller coaster ride. Either you can throw your hands in air and scream your lungs out, or you can enjoy the ride.
David C,
Check out the Monetary Base (BASE) graph in the monetary indictors section of this website.
Futile attempt.
Money supply can not be measured.
I used to get annoyed at having to study the velocity of money.It seemed an unnecessary complication. Now I see how important it is.
Mises defined inflation as any increase in the supply of money that exceeds the demand for cash holdings.
That last part is important.
During the Weimar inflation German economists mistook the demand for exchange cash for cash holdings and increased the supply.
Now many quite good economists are making the opposite mistake.
Currently we are seeing the exact opposite of a flight to real values as yields on T-bills get hammered flat
and commodity prices tumble.
This could reverse quickly.It all depends on the twistings and turnings inside the heads of our so called leaders.
If I am getting this wrong I’m all ears.
The deflation/inflation/stagflation debate rages on…
When people ask me what will happen to inflation I reply: in what time frame? what temporal dimension or context are you talking about
Clearly we currently have deflation, but in the future???
Down the road when things (eventually) turn around we could see massive increases in prices. Credit is being destroyed but the Fed & Treasury are desperately trying to reinflate the system. Eventually this will work its way through the system, and global demand will only be larger in the next upswing.
The roller coaster has only gotten bigger and the ( future) ride wilder in my view, not to mention that moral hazard has yet again been increased with the recent actions of gov’t….
-John Bardacino
yes, only this roller coaster can go up as fast as it can go down. If anything, right now we should be bracing tighter and tighter, as though we are being cranked up the ramp before the huge dip. Only in this case, it will be massive inflation.
but beyond that…who knows
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